Pakistan opposed to withdrawing petroleum subsidies

May 29th, 2008 - 3:15 pm ICT by admin  

Islamabad, May 29 (IANS) Pakistan is resisting pressure from the World Bank and the International Monetary Fund (IMF) to withdraw subsidies on petroleum products, saying the economy would not be able to withstand the “shock” at this stage. Prime Minister Syed Yousaf Raza Gillani made the government’s stand clear at a high-level meeting here on budgetary matters, contending that the subsidies would be gradually withdrawn and only after the government succeeded in mobilising new resources by overhauling the country’s tax regime.

“New resources are required to provide some respite to the poor and lower-middle income groups,” Dawn Thursday quoted Gillani as saying at the meeting.

World Bank Vice President for South Asia Praful C. Patel and IMF Director for South Asia and Middle East Mohsin Khan have proposed to the Pakistani government to “immediately do away with all subsidies” on oil, wheat and fertilisers to improve the economic health of the country.

They have also told Gillani that Indonesia and Sri Lanka had recently removed the subsidies and Pakistan should also swallow the “bitter pill” to achieve the much-needed macro-economic discipline.

The budgetary meeting agreed to “prevent further bleeding” by re-arranging priorities to achieve economic stability, Dawn said.

“The situation is extremely challenging because the budget-making has been facing constraints owing to lack of funds,” it quoted a source as saying.

“A balancing act would be required to generate resources, including from international agencies, and to offer some relief to people,” the source added.

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